Price and quantity discovery without commitment

Stefan Bergheimer, Estelle Cantillon*, Mar Reguant

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


Wholesale electricity markets solve a complex allocation problem: electricity is not storable, demand is uncertain, and production involves dynamic cost considerations and indivisibilities. The New Zealand wholesale electricity market attempts to solve this complex allocation problem by using an indicative price and quantity discovery mechanism that ends at dispatch. Can such a market mechanism without commitment provide useful information? We document that indicative prices and quantities are increasingly informative of the final prices and quantities and that bid revisions are consistent with information-based updating. We argue that the reason why the predispatch market is informative despite the lack of commitment is that it generates private benefits in terms of improved intertemporal optimization of production plans.

Original languageEnglish (US)
Article number102987
JournalInternational Journal of Industrial Organization
StatePublished - Sep 2023


  • Coordination
  • Electricity markets
  • Intertemporal optimization
  • Non-trading mechanisms
  • Pre-play communication
  • Price discovery

ASJC Scopus subject areas

  • Industrial relations
  • Aerospace Engineering
  • Strategy and Management
  • Industrial and Manufacturing Engineering


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